Legal Services Corporation: More Needs to be Done to

Legal Services Corporation: More Needs to be Done to Correct Case Service
Reporting Problems (Testimony, 09/29/1999, GAO/T-GGD-99-185).

The Legal Services Corporation (LSC), operating through grantees,
provides legal assistance in civil matters to low-income persons. In the
past year, LSC's Office of Inspector General and GAO have cited
misreporting by grantees on both the number of cases they closed in 1997
and the number they had open at the end of that year. The accuracy of
the data is important because LSC has used case statistics to seek
higher funding and Congress has considered these statistics in setting
funding for LSC. This testimony summarizes the September 1999 GAO
report, GAO/GGD-99-183, which determined (1) what efforts LSC and its
grantees have made to correct problems with case service reporting and
(2) whether these efforts are likely to resolve the case reporting
problems that occurred in 1997.

--------------------------- Indexing Terms -----------------------------

REPORTNUM: T-GGD-99-185
TITLE: Legal Services Corporation: More Needs to be Done to
Correct Case Service Reporting Problems
DATE: 09/29/1999
SUBJECT: Administrative errors
Internal controls
Statistical data
Grant administration
Reporting requirements
Eligibility criteria
Legal aid
Data integrity
IDENTIFIER: LSC Case Service Reporting System

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GAO/T-GGD-99-185

LEGAL SERVICES CORPORATION: More Needs to Be Done to Correct Case Service Reporting Problems (GAO/T-GGD-99-185)
LEGAL SERVICES CORPORATION
More Needs to Be Done to Correct Case Service Reporting Problems
Statement of Laurie E. Ekstrand, Director, Administration of Justice Issues, General Government Division
United States General Accounting Office
GAO Testimony Before the Subcommittee on Commercial and
Administrative Law Committee on the Judiciary House of Representatives
For Release on Delivery 2: 00 p. m. EDT Wednesday September 29, 1999

GAO/T-GGD-99-185

Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 1 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
Mr. Chairman and Members of the Committee: I am pleased to be here today to discuss two reviews that we have completed pertaining to case service reporting by the Legal Services Corporation (LSC). During the past year, both the LSC Office of the Inspector General (OIG) and we identified misreporting by grantees on both the number of cases they closed during calendar year 1997 and the number they had open at the end of that year. In a June 1999 report, we estimated that nearly 75,000 of the approximately 221,000 cases reported to LSC by 5 of its largest grantees were questionable. 1 In light of these findings, we were asked to determine (1) what efforts LSC and its grantees have made to correct case reporting problems, and (2) whether these efforts are likely to resolve the case reporting problems that occurred in 1997. In a report issued earlier this month 2 we found the following:
LSC revised its written case reporting guidance and issued a new handbook to its grantees to clarify case reporting requirements.
Grantees reported changing their policies and procedures to comply with LSC's new reporting requirements.
Although most grantees indicated that LSC's revised case reporting guidance has clarified reporting requirements for grantees, many grantees remained unclear about certain aspects of LSC's reporting requirements.
Problems existed with LSC's self- inspection, which sought to verify the accuracy of 1998 Case Service Reporting (CSR) data.
We believe that more needs to be done to correct reporting problems at LSC. We made eight recommendations to help LSC improve the accuracy of future CSR reports.
LSC was established in 1974 as a private, nonprofit, federally funded corporation to provide legal assistance to low- income people in civil matters. LSC provides the assistance indirectly, through grants to about 260 competitively selected local programs. Grantees may receive additional funding from non- LSC sources. In fiscal years 1998 and 1999, LSC received appropriations of $283 million and $300 million, respectively.
To qualify for LSC representation, clients must meet both financial and citizenship/ alien eligibility requirements. With respect to financial
1 Legal Services Corporation: Substantial Problems in 1997 Case Reporting by Five Grantees (GAO/ GGD- 99- 135R, June 25, 1999). 2 Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems (GAO/ GGD- 99- 183, September 20, 1999). Background
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 2 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
eligibility, clients' income, in general, is not to exceed 125 percent of the federal poverty guidelines. LSC regulations require that grantees (1) adopt a form and procedure to obtain eligibility information and (2) preserve that information for audit by LSC. With respect to citizenship/ alien eligibility, only citizens and certain categories of aliens are eligible for services. For clients who are provided services in person, a citizen attestation form or documentation of eligible alien status is required. For clients who are provided services via the telephone, documentation of the inquiry regarding citizenship/ alien eligibility is required.
LSC uses a Case Service Reporting system to gather quantifiable information from grantees on the services they provide that meet LSC's definition of a case. The CSR Handbook is LSC's primary official guidance to grantees on how to record and report cases. LSC relies on such case information in its annual request for federal funding.
Audit reports issued by LSC's OIG between October 1998 and July 1999 reported that five grantees misreported the number of cases they had closed during calendar year 1997 and the number of cases that remained open at the end of that year. The OIG found that all five grantees overstated the number of closed cases, while four overstated and one understated open cases.
In June 1999, in response to Congress' request for information on whether the 1997 case data of other LSC programs had problems similar to those reported by LSC's OIG, we issued a report on our audit of five of LSC's largest grantees: Baltimore, Chicago, Los Angeles, New York City, and Puerto Rico. 3 We conducted a file review of a random sample of cases at each of these grantees to determine the extent to which they made overreporting errors in reporting cases closed during 1997 and cases open on December 31, 1997. We found similar types of reporting errors to those the OIG found and estimated that, overall, about 75,000 (+/- 6, 100) of the approximately 221,000 cases that the five grantees reported to LSC for 1997 were questionable. Three grantees identified about 30,000 of their cases as misreported prior to our case file review. The primary causes for these self- identified overreporting errors were (1) improperly reporting to LSC cases that were wholly funded by other sources, such as states, and (2) problems related to case management reporting systems, such as grantee staffs' difficulty in transitioning to new automated systems.
3 GAO/ GGD- 99- 135R, June 25, 1999. Our Audit of Five LSC
Grantees Found That One- Third of 1997 Cases Were Questionable
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 3 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
Our case file review deemed approximately 45,000 additional cases questionable for one of the following reasons:
The grantee reported duplicate cases for the same legal service to the same client.
Some case files did not contain any documentation supporting the grantee's determination that the client was either a U. S. citizen or eligible alien.
For cases reported as closed in 1997, some case files showed no activity during the 12 months before the case was closed. For cases reported as open as of December 31, 1997, some cases showed no grantee activity during calendar year 1997.
Some case files did not contain any documentation that the grantee had determined that the client was financially eligible for LSC services. LSC regulations did not require specific documentation of these determinations in all cases. However, they required that grantees (1) adopt a form and procedure to obtain eligibility information and (2) preserve that information for audit by LSC.
LSC officials and executive directors of the five grantees told us that they had taken or were planning to take steps to correct these case reporting problems.
LSC issued a new, 1999 CSR Handbook and distributed other written communications intended to clarify reporting requirements to its grantees. The 1999 handbook, which replaced the 1993 edition, instituted changes to some of LSC's reporting requirements and provided more detailed information on other requirements.
In responding to a GAO telephone survey, most grantees indicated that the new guidance helped clarify LSC's reporting requirements, and virtually all of them indicated that they had or planned to make program changes as a result of the requirements. Many grantees, however, identified areas of case reporting that remained unclear to them.
The 1999 CSR Handbook included changes to (1) procedures for timely closing of cases; (2) procedures for management review of case service reports; (3) procedures for ensuring single recording of cases; (4) requirements to report LSC- eligible cases, regardless of funding source; and (5) requirements for reporting cases involving private attorneys separately. LSC's Clarified
Reporting Guidance Resulted in Program Changes, but Some Requirements Remain Unclear to Many Grantees
LSC Issued New CSR Guidance
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 4 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
On November 24, 1998, LSC informed its grantees that two of the changes in the 1999 CSR Handbook were to be applied to the 1998 case data. The two changes pertained to timely closing of cases and management review of case service reports. The remaining new provisions of the 1999 CSR Handbook were not applicable to 1998 cases. For example, for 1998, there was no requirement for grantees to ensure that cases were not double counted. For 1999, LSC is requiring the use of automated case management systems and procedures to ensure that cases involving the same client and specific legal problem are not reported to LSC more than once.
For 1998, grantees could report only those cases that were at least partially supported by LSC funds. For 1999, LSC is requiring grantees to report all LSC- eligible cases, regardless of funding source. LSC intends to estimate the percentage of activity spent on LSC service by applying a formula that incorporates the amount of funds grantees receive from other funding sources compared with the amount they receive from LSC.
In addition to changing certain reporting requirements, the 1999 handbook also provides more detailed guidance to grantees than the 1993 handbook. For example, the 1999 handbook provides more specific definitions of what constitutes a case and a client for CSR purposes. The 1999 handbook also addresses documentation requirements that were not discussed in the 1993 handbook.
Based on our survey of executive directors of 79 grantees, we estimate that over 90 percent 4 of grantee executive directors viewed the changes in the 1999 CSR Handbook as being clear overall, and virtually all of them indicated that they planned to or had made at least one change to their program operations as a result of the revised case reporting requirements. These changes included revising policies and procedures, providing staff training, modifying forms and/ or procedures used during client intake, implementing computer hardware and software changes, and increasing reviews of cases.
Although most of the grantee executive directors reported that the new LSC guidance helped clarify requirements, many of them also indicated that they were still unclear about certain requirements and that additional clarification was needed. Areas of confusion or uncertainty that executive directors identified included requirements pertaining to asset and
4 We conducted telephone interviews with a random sample of executive directors of 79 grantees. All percentage estimates from the results of this survey have 95 percent confidence intervals with a margin of error of 10 percent or less. Grantee Directors Reported
That They Are Implementing Changes to Comply With Reporting Requirements
Many Grantees Remain Unclear About Certain Reporting Requirements
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 5 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
citizenship/ alien eligibility documentation, single recording of cases, and who can provide legal services.
LSC sought to determine the accuracy of grantees' case data by requiring that grantees complete self- inspections of their open and closed caseload data for 1998. Grantees were required to determine whether the error rate in their data exceeded 5 percent. According to LSC, about three- fourths of the grantees certified that the error in their data was 5 percent or less. LSC used the results of the self- inspections to estimate the total number of case closings in 1998. Our review of LSC's self- inspection process raised concerns about the accuracy and interpretation of the results, and what the correct number of certifying programs should be.
On May 14, 1999, LSC issued a memo to all grantees instructing them to complete a self- inspection procedure by July 1, 1999. The purpose of the self- inspection was to ensure that (1) grantees were properly applying instructions in the 1999 edition of the CSR Handbook that were applicable to the 1998 data, and (2) LSC had accurate case statistical information to report to Congress for calendar year 1998.
LSC provided detailed guidance to grantees on the procedures for the selfinspection. Each grantee was to select and separately test random samples of open and closed cases to determine whether the number of cases it reported to LSC earlier in the year was correct. Grantees were to verify that the case file contained a notation of the type of assistance provided, the date on which the assistance was provided, and the name of the case handler providing the assistance. Grantees were also to determine whether assistance had ceased prior to January 1, 1998; was within certain service categories as defined by the 1999 handbook; was provided by an attorney or paralegal; and was not prohibited or restricted. Finally, grantees were to verify that each case had eligibility information on household income, size, assets, citizenship attestation for in- person cases, and indication of citizenship/ alien status for telephone- only cases.
If any single aspect of a case failed to meet LSC's requirements, the case was to be classified as an error for reporting purposes. If the grantees found that their CSR case sampling had an error rate of 5 percent or less, the program directors and policy board chairs were to sign a certification form and return it to LSC. Grantees who could not certify to the correctness of their 1998 CSR data were to submit a letter to LSC describing (1) the problems they had identified during the self- inspection process and (2) the corrective actions they had instituted to address the problems. Grantees could resubmit their 1998 CSR data to LSC if they Most Grantees
Certified the Accuracy of Their 1998 CSR Data, but Questions About Data Accuracy and Interpretation Remain
LSC Grantees Conducted Self- Inspections of 1998 CSR Data
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 6 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
identified one or more problems in the random sample and corrected their entire 1998 database so that the problems no longer appeared. If, by correcting the problems, the error rate in the data was reduced to 5 percent or less, the grantees could resubmit their 1998 data along with a signed certification attesting to the substantial accuracy of the resubmitted data. In this way, grantees who were unable to certify at one point in time could certify at a later point in time.
According to LSC officials, about three- fourths of the grantees certified the accuracy of their 1998 case data. As of August 26, 1999, LSC documents indicated that 199 of 261 grantees 5 (76 percent) reported substantially correct CSR data to LSC. The remaining 62 grantees (24 percent) did not certify to LSC that their CSR data were substantially correct. According to LSC, 30 of the 50 largest grantees did not certify their 1998 data.
LSC officials told us they were surprised that such a large number of grantees certified their 1998 CSR data. They attributed the results to the following factors: (1) the self- inspection did not attempt to identify duplicate cases; (2) grantees received the new 1999 handbook in November 1998 and had already implemented some of the new requirements; and (3) grantees were less likely to report as cases telephone referrals in which no legal advice had been given and/ or clients' eligibility had not been determined because they were aware that the OIG identified this as a problem.
On the basis of the self- inspection results, LSC estimated that grantees closed 1. 1 million cases in 1998.
Our review raised some concerns about LSC's interpretation of the selfinspection results and about the accuracy of the data provided to LSC by grantees. As a result, we could not assess the accuracy of LSC's estimate of the number of certified programs and case closures for 1998.
LSC did not issue standardized procedures for grantees to use in reporting the results of their self- inspections. Grantees that could not certify their data wrote letters to LSC that contained varying degrees of detail about data errors that they found. Since LSC did not have a standard protocol for collecting the results of the self- inspections, LSC officials in some cases had to rely on their own interpretations of grantees' descriptions of the problems they had discovered.
5 LSC funded 262 programs in 1998. Funding for one program was discontinued in 1999, and LSC has no self- inspection results for this program. Most Grantees Certified
Their 1998 CSR Data Self- Inspection Results Raised Concerns
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 7 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
We are uncertain how many programs should have been counted as certified because we are uncertain if LSC applied a consistent definition of certification. Most programs that were on LSC's certification list determined that they had error rates of 5 percent or less for both open and closed cases. However, LSC placed some programs on the certified list if the program's overall error rate for closed cases was 5 percent or less, even if the overall error rate actually was higher than 5 percent. In two instances, executive directors told us that they did not certify their CSR data because their overall error rate exceeded 5 percent. However, these programs appeared on LSC's list of certified programs. When we asked an LSC official about this, he told us that they advised grantees that if their closed case error rate did not exceed 5 percent, they should partially certify their data. In response to our inquiry, the official reviewed the certification letters submitted by nearly 200 grantees, and identified 5 certified programs whose error rates for open cases exceeded 5 percent. Given that some grantees submitted only an overall estimate of data error, we do not know how many programs qualified to be certified overall, just for closed cases, or just for open cases.
We are also concerned that LSC's instructions to grantees on how to conduct the self- inspections may have led some of the smaller grantees to select too few test cases to make a reliable assessment of the proportion of error in their case data. Because these were smaller grantees, this limitation would have had little effect on LSC's estimate of the total closed caseload. However, it could have affected LSC's count of the number of certified programs.
LSC does not know how well grantees conducted the self- inspection process, nor how accurate the results are. We spoke with several executive directors who did not correctly follow LSC's reporting requirements. Incorrect interpretations of LSC guidance may have resulted in some programs certifying their 1998 data when they should not have, and other programs not certifying their 1998 data when they should have. An LSC official told us that, although they have conducted CSR training sessions for grantee executive directors, thousands of case handlers in grantee offices have not received such training. The official acknowledged that written guidance and telephone contacts with grantees may not be sufficient to ensure correct and consistent understanding of reporting requirements, and that LSC plans to consider alternative ways of providing training to staff.
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 8 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
LSC officials told us that the self- inspection was valuable and that LSC plans to have grantees complete self- inspections again early next year as part of the 1999 CSR reporting process.
LSC's 1999 CSR Handbook and other written communications have improved the clarity of reporting requirements for its grantees. However, many grantees remained unclear about and/ or misunderstood certain aspects of the reporting requirements. LSC's practice of disseminating guidance primarily by written or telephone communications may not be sufficient to ensure that grantees correctly and consistently interpret the requirements.
LSC sought to determine the accuracy of grantees' 1998 case statistics by requiring grantees to conduct self- inspections. However, we do not know the extent to which the results of the self- inspection process are accurate. The validity of the results are difficult to determine because LSC did not standardize the way that grantees were to report their results, some of the grantees used samples that were too small to assess the proportion of error in their data, some grantees did not correctly follow LSC's reporting guidance, and LSC had done no verification of the grantees' self- inspection procedures.
We do not believe that LSC's actions, to date, have been sufficient to fully resolve the case reporting problems that occurred in 1997.
In our September 20, 1999, report 6 we recommended that the President of LSC:
clarify and disseminate information on the specific information on client assets that grantees must obtain, record, and maintain;
clarify and disseminate information on the types of citizenship/ alien eligibility information grantees must obtain, record, and maintain for clients who receive legal assistance only over the telephone;
clarify and disseminate LSC's criteria for single recording of cases;
clarify and disseminate LSC's policy concerning who can provide legal assistance to clients for the service to be counted as a case;
explore options for facilitating correct and consistent understanding of reporting requirements, including developing and disseminating a training video for grantee staff;
6 GAO/ GGD- 99- 183, September 20, 1999. Conclusions
Recommendations
Statement Legal Services Corporation: More Needs to Be Done to Correct Case Service Reporting Problems
Page 9 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
develop a standard protocol for future self- inspections to ensure that grantees systematically and consistently report their results for open and closed cases;
direct grantees to select samples for future self- inspections that are sufficient to draw reliable conclusions about magnitude of case data errors; and finally,
ensure that procedures are in place to validate the results of LSC's 1998 self- inspection, as well as of any future self- inspections.
In a written response to a draft of our report, the President of LSC generally agreed with our findings and noted that he plans to implement our recommendations to the fullest extent possible.
Mr. Chairman, this concludes my prepared statement. I would be pleased to answer any questions that you or other Members of the Committee may have.
Contacts and Acknowledgement
For further information regarding this testimony please contact Laurie E. Ekstrand or Evi Rezmovic on (202) 512- 8777. Individuals making key contributions to this testimony included Mark Tremba and Jan Montgomery.
Page 10 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
Page 11 GAO/ T- GGD- 99- 185 LSC Case Reporting Problems
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LEGAL SERVICES CORPORATION: More Needs to Be Done to Correct Case
Service Reporting Problems (GAO/T-GGD-99-185) LEGAL SERVICES
CORPORATION More Needs to Be Done to Correct Case Service
Reporting Problems Statement of Laurie E. Ekstrand, Director,
Administration of Justice Issues, General Government Division
United States General Accounting Office GAO Testimony Before the
Subcommittee on Commercial and Administrative Law Committee on the
Judiciary House of Representatives For Release on Delivery 2: 00
p. m. EDT Wednesday September 29, 1999 GAO/T-GGD-99-185
Statement Legal Services Corporation: More Needs to Be Done to
Correct Case Service Reporting Problems Page 1 GAO/T-GGD-99-185
LSC Case Reporting Problems Mr. Chairman and Members of the
Committee: I am pleased to be here today to discuss two reviews
that we have completed pertaining to case service reporting by the
Legal Services Corporation (LSC). During the past year, both the
LSC Office of the Inspector General (OIG) and we identified
misreporting by grantees on both the number of cases they closed
during calendar year 1997 and the number they had open at the end
of that year. In a June 1999 report, we estimated that nearly
75,000 of the approximately 221,000 cases reported to LSC by 5 of
its largest grantees were questionable. 1 In light of these
findings, we were asked to determine (1) what efforts LSC and its
grantees have made to correct case reporting problems, and (2)
whether these efforts are likely to resolve the case reporting
problems that occurred in 1997. In a report issued earlier this
month 2 we found the following: LSC revised its written case
reporting guidance and issued a new handbook to its grantees to
clarify case reporting requirements. Grantees reported changing
their policies and procedures to comply with LSC's new reporting
requirements. Although most grantees indicated that LSC's revised
case reporting guidance has clarified reporting requirements for
grantees, many grantees remained unclear about certain aspects of
LSC's reporting requirements. Problems existed with LSC's self-
inspection, which sought to verify the accuracy of 1998 Case
Service Reporting (CSR) data. We believe that more needs to be
done to correct reporting problems at LSC. We made eight
recommendations to help LSC improve the accuracy of future CSR
reports. LSC was established in 1974 as a private, nonprofit,
federally funded corporation to provide legal assistance to low-
income people in civil matters. LSC provides the assistance
indirectly, through grants to about 260 competitively selected
local programs. Grantees may receive additional funding from non-
LSC sources. In fiscal years 1998 and 1999, LSC received
appropriations of $283 million and $300 million, respectively. To
qualify for LSC representation, clients must meet both financial
and citizenship/ alien eligibility requirements. With respect to
financial 1 Legal Services Corporation: Substantial Problems in
1997 Case Reporting by Five Grantees (GAO/GGD-99-135R, June 25,
1999). 2 Legal Services Corporation: More Needs to Be Done to
Correct Case Service Reporting Problems (GAO/GGD-99-183, September
20, 1999). Background Statement Legal Services Corporation: More
Needs to Be Done to Correct Case Service Reporting Problems Page 2
GAO/T-GGD-99-185 LSC Case Reporting Problems eligibility, clients'
income, in general, is not to exceed 125 percent of the federal
poverty guidelines. LSC regulations require that grantees (1)
adopt a form and procedure to obtain eligibility information and
(2) preserve that information for audit by LSC. With respect to
citizenship/ alien eligibility, only citizens and certain
categories of aliens are eligible for services. For clients who
are provided services in person, a citizen attestation form or
documentation of eligible alien status is required. For clients
who are provided services via the telephone, documentation of the
inquiry regarding citizenship/ alien eligibility is required. LSC
uses a Case Service Reporting system to gather quantifiable
information from grantees on the services they provide that meet
LSC's definition of a case. The CSR Handbook is LSC's primary
official guidance to grantees on how to record and report cases.
LSC relies on such case information in its annual request for
federal funding. Audit reports issued by LSC's OIG between October
1998 and July 1999 reported that five grantees misreported the
number of cases they had closed during calendar year 1997 and the
number of cases that remained open at the end of that year. The
OIG found that all five grantees overstated the number of closed
cases, while four overstated and one understated open cases. In
June 1999, in response to Congress' request for information on
whether the 1997 case data of other LSC programs had problems
similar to those reported by LSC's OIG, we issued a report on our
audit of five of LSC's largest grantees: Baltimore, Chicago, Los
Angeles, New York City, and Puerto Rico. 3 We conducted a file
review of a random sample of cases at each of these grantees to
determine the extent to which they made overreporting errors in
reporting cases closed during 1997 and cases open on December 31,
1997. We found similar types of reporting errors to those the OIG
found and estimated that, overall, about 75,000 (+/- 6, 100) of
the approximately 221,000 cases that the five grantees reported to
LSC for 1997 were questionable. Three grantees identified about
30,000 of their cases as misreported prior to our case file
review. The primary causes for these self- identified
overreporting errors were (1) improperly reporting to LSC cases
that were wholly funded by other sources, such as states, and (2)
problems related to case management reporting systems, such as
grantee staffs' difficulty in transitioning to new automated
systems. 3 GAO/GGD-99-135R, June 25, 1999. Our Audit of Five LSC
Grantees Found That One- Third of 1997 Cases Were Questionable
Statement Legal Services Corporation: More Needs to Be Done to
Correct Case Service Reporting Problems Page 3 GAO/T-GGD-99-185
LSC Case Reporting Problems Our case file review deemed
approximately 45,000 additional cases questionable for one of the
following reasons: The grantee reported duplicate cases for the
same legal service to the same client. Some case files did not
contain any documentation supporting the grantee's determination
that the client was either a U. S. citizen or eligible alien. For
cases reported as closed in 1997, some case files showed no
activity during the 12 months before the case was closed. For
cases reported as open as of December 31, 1997, some cases showed
no grantee activity during calendar year 1997. Some case files
did not contain any documentation that the grantee had determined
that the client was financially eligible for LSC services. LSC
regulations did not require specific documentation of these
determinations in all cases. However, they required that grantees
(1) adopt a form and procedure to obtain eligibility information
and (2) preserve that information for audit by LSC. LSC officials
and executive directors of the five grantees told us that they had
taken or were planning to take steps to correct these case
reporting problems. LSC issued a new, 1999 CSR Handbook and
distributed other written communications intended to clarify
reporting requirements to its grantees. The 1999 handbook, which
replaced the 1993 edition, instituted changes to some of LSC's
reporting requirements and provided more detailed information on
other requirements. In responding to a GAO telephone survey, most
grantees indicated that the new guidance helped clarify LSC's
reporting requirements, and virtually all of them indicated that
they had or planned to make program changes as a result of the
requirements. Many grantees, however, identified areas of case
reporting that remained unclear to them. The 1999 CSR Handbook
included changes to (1) procedures for timely closing of cases;
(2) procedures for management review of case service reports; (3)
procedures for ensuring single recording of cases; (4)
requirements to report LSC- eligible cases, regardless of funding
source; and (5) requirements for reporting cases involving private
attorneys separately. LSC's Clarified Reporting Guidance Resulted
in Program Changes, but Some Requirements Remain Unclear to Many
Grantees LSC Issued New CSR Guidance Statement Legal Services
Corporation: More Needs to Be Done to Correct Case Service
Reporting Problems Page 4 GAO/T-GGD-99-185 LSC Case Reporting
Problems On November 24, 1998, LSC informed its grantees that two
of the changes in the 1999 CSR Handbook were to be applied to the
1998 case data. The two changes pertained to timely closing of
cases and management review of case service reports. The remaining
new provisions of the 1999 CSR Handbook were not applicable to
1998 cases. For example, for 1998, there was no requirement for
grantees to ensure that cases were not double counted. For 1999,
LSC is requiring the use of automated case management systems and
procedures to ensure that cases involving the same client and
specific legal problem are not reported to LSC more than once. For
1998, grantees could report only those cases that were at least
partially supported by LSC funds. For 1999, LSC is requiring
grantees to report all LSC- eligible cases, regardless of funding
source. LSC intends to estimate the percentage of activity spent
on LSC service by applying a formula that incorporates the amount
of funds grantees receive from other funding sources compared with
the amount they receive from LSC. In addition to changing certain
reporting requirements, the 1999 handbook also provides more
detailed guidance to grantees than the 1993 handbook. For example,
the 1999 handbook provides more specific definitions of what
constitutes a case and a client for CSR purposes. The 1999
handbook also addresses documentation requirements that were not
discussed in the 1993 handbook. Based on our survey of executive
directors of 79 grantees, we estimate that over 90 percent 4 of
grantee executive directors viewed the changes in the 1999 CSR
Handbook as being clear overall, and virtually all of them
indicated that they planned to or had made at least one change to
their program operations as a result of the revised case reporting
requirements. These changes included revising policies and
procedures, providing staff training, modifying forms and/ or
procedures used during client intake, implementing computer
hardware and software changes, and increasing reviews of cases.
Although most of the grantee executive directors reported that the
new LSC guidance helped clarify requirements, many of them also
indicated that they were still unclear about certain requirements
and that additional clarification was needed. Areas of confusion
or uncertainty that executive directors identified included
requirements pertaining to asset and 4 We conducted telephone
interviews with a random sample of executive directors of 79
grantees. All percentage estimates from the results of this survey
have 95 percent confidence intervals with a margin of error of 10
percent or less. Grantee Directors Reported That They Are
Implementing Changes to Comply With Reporting Requirements Many
Grantees Remain Unclear About Certain Reporting Requirements
Statement Legal Services Corporation: More Needs to Be Done to
Correct Case Service Reporting Problems Page 5 GAO/T-GGD-99-185
LSC Case Reporting Problems citizenship/ alien eligibility
documentation, single recording of cases, and who can provide
legal services. LSC sought to determine the accuracy of grantees'
case data by requiring that grantees complete self- inspections of
their open and closed caseload data for 1998. Grantees were
required to determine whether the error rate in their data
exceeded 5 percent. According to LSC, about three- fourths of the
grantees certified that the error in their data was 5 percent or
less. LSC used the results of the self- inspections to estimate
the total number of case closings in 1998. Our review of LSC's
self- inspection process raised concerns about the accuracy and
interpretation of the results, and what the correct number of
certifying programs should be. On May 14, 1999, LSC issued a memo
to all grantees instructing them to complete a self- inspection
procedure by July 1, 1999. The purpose of the self- inspection was
to ensure that (1) grantees were properly applying instructions in
the 1999 edition of the CSR Handbook that were applicable to the
1998 data, and (2) LSC had accurate case statistical information
to report to Congress for calendar year 1998. LSC provided
detailed guidance to grantees on the procedures for the
selfinspection. Each grantee was to select and separately test
random samples of open and closed cases to determine whether the
number of cases it reported to LSC earlier in the year was
correct. Grantees were to verify that the case file contained a
notation of the type of assistance provided, the date on which the
assistance was provided, and the name of the case handler
providing the assistance. Grantees were also to determine whether
assistance had ceased prior to January 1, 1998; was within certain
service categories as defined by the 1999 handbook; was provided
by an attorney or paralegal; and was not prohibited or restricted.
Finally, grantees were to verify that each case had eligibility
information on household income, size, assets, citizenship
attestation for in- person cases, and indication of citizenship/
alien status for telephone- only cases. If any single aspect of a
case failed to meet LSC's requirements, the case was to be
classified as an error for reporting purposes. If the grantees
found that their CSR case sampling had an error rate of 5 percent
or less, the program directors and policy board chairs were to
sign a certification form and return it to LSC. Grantees who could
not certify to the correctness of their 1998 CSR data were to
submit a letter to LSC describing (1) the problems they had
identified during the self- inspection process and (2) the
corrective actions they had instituted to address the problems.
Grantees could resubmit their 1998 CSR data to LSC if they Most
Grantees Certified the Accuracy of Their 1998 CSR Data, but
Questions About Data Accuracy and Interpretation Remain LSC
Grantees Conducted Self- Inspections of 1998 CSR Data Statement
Legal Services Corporation: More Needs to Be Done to Correct Case
Service Reporting Problems Page 6 GAO/T-GGD-99-185 LSC Case
Reporting Problems identified one or more problems in the random
sample and corrected their entire 1998 database so that the
problems no longer appeared. If, by correcting the problems, the
error rate in the data was reduced to 5 percent or less, the
grantees could resubmit their 1998 data along with a signed
certification attesting to the substantial accuracy of the
resubmitted data. In this way, grantees who were unable to certify
at one point in time could certify at a later point in time.
According to LSC officials, about three- fourths of the grantees
certified the accuracy of their 1998 case data. As of August 26,
1999, LSC documents indicated that 199 of 261 grantees 5 (76
percent) reported substantially correct CSR data to LSC. The
remaining 62 grantees (24 percent) did not certify to LSC that
their CSR data were substantially correct. According to LSC, 30 of
the 50 largest grantees did not certify their 1998 data. LSC
officials told us they were surprised that such a large number of
grantees certified their 1998 CSR data. They attributed the
results to the following factors: (1) the self- inspection did not
attempt to identify duplicate cases; (2) grantees received the new
1999 handbook in November 1998 and had already implemented some of
the new requirements; and (3) grantees were less likely to report
as cases telephone referrals in which no legal advice had been
given and/ or clients' eligibility had not been determined because
they were aware that the OIG identified this as a problem. On the
basis of the self- inspection results, LSC estimated that grantees
closed 1. 1 million cases in 1998. Our review raised some concerns
about LSC's interpretation of the selfinspection results and about
the accuracy of the data provided to LSC by grantees. As a result,
we could not assess the accuracy of LSC's estimate of the number
of certified programs and case closures for 1998. LSC did not
issue standardized procedures for grantees to use in reporting the
results of their self- inspections. Grantees that could not
certify their data wrote letters to LSC that contained varying
degrees of detail about data errors that they found. Since LSC did
not have a standard protocol for collecting the results of the
self- inspections, LSC officials in some cases had to rely on
their own interpretations of grantees' descriptions of the
problems they had discovered. 5 LSC funded 262 programs in 1998.
Funding for one program was discontinued in 1999, and LSC has no
self- inspection results for this program. Most Grantees Certified
Their 1998 CSR Data Self- Inspection Results Raised Concerns
Statement Legal Services Corporation: More Needs to Be Done to
Correct Case Service Reporting Problems Page 7 GAO/T-GGD-99-185
LSC Case Reporting Problems We are uncertain how many programs
should have been counted as certified because we are uncertain if
LSC applied a consistent definition of certification. Most
programs that were on LSC's certification list determined that
they had error rates of 5 percent or less for both open and closed
cases. However, LSC placed some programs on the certified list if
the program's overall error rate for closed cases was 5 percent or
less, even if the overall error rate actually was higher than 5
percent. In two instances, executive directors told us that they
did not certify their CSR data because their overall error rate
exceeded 5 percent. However, these programs appeared on LSC's list
of certified programs. When we asked an LSC official about this,
he told us that they advised grantees that if their closed case
error rate did not exceed 5 percent, they should partially certify
their data. In response to our inquiry, the official reviewed the
certification letters submitted by nearly 200 grantees, and
identified 5 certified programs whose error rates for open cases
exceeded 5 percent. Given that some grantees submitted only an
overall estimate of data error, we do not know how many programs
qualified to be certified overall, just for closed cases, or just
for open cases. We are also concerned that LSC's instructions to
grantees on how to conduct the self- inspections may have led some
of the smaller grantees to select too few test cases to make a
reliable assessment of the proportion of error in their case data.
Because these were smaller grantees, this limitation would have
had little effect on LSC's estimate of the total closed caseload.
However, it could have affected LSC's count of the number of
certified programs. LSC does not know how well grantees conducted
the self- inspection process, nor how accurate the results are. We
spoke with several executive directors who did not correctly
follow LSC's reporting requirements. Incorrect interpretations of
LSC guidance may have resulted in some programs certifying their
1998 data when they should not have, and other programs not
certifying their 1998 data when they should have. An LSC official
told us that, although they have conducted CSR training sessions
for grantee executive directors, thousands of case handlers in
grantee offices have not received such training. The official
acknowledged that written guidance and telephone contacts with
grantees may not be sufficient to ensure correct and consistent
understanding of reporting requirements, and that LSC plans to
consider alternative ways of providing training to staff.
Statement Legal Services Corporation: More Needs to Be Done to
Correct Case Service Reporting Problems Page 8 GAO/T-GGD-99-185
LSC Case Reporting Problems LSC officials told us that the self-
inspection was valuable and that LSC plans to have grantees
complete self- inspections again early next year as part of the
1999 CSR reporting process. LSC's 1999 CSR Handbook and other
written communications have improved the clarity of reporting
requirements for its grantees. However, many grantees remained
unclear about and/ or misunderstood certain aspects of the
reporting requirements. LSC's practice of disseminating guidance
primarily by written or telephone communications may not be
sufficient to ensure that grantees correctly and consistently
interpret the requirements. LSC sought to determine the accuracy
of grantees' 1998 case statistics by requiring grantees to conduct
self- inspections. However, we do not know the extent to which the
results of the self- inspection process are accurate. The validity
of the results are difficult to determine because LSC did not
standardize the way that grantees were to report their results,
some of the grantees used samples that were too small to assess
the proportion of error in their data, some grantees did not
correctly follow LSC's reporting guidance, and LSC had done no
verification of the grantees' self- inspection procedures. We do
not believe that LSC's actions, to date, have been sufficient to
fully resolve the case reporting problems that occurred in 1997.
In our September 20, 1999, report 6 we recommended that the
President of LSC: clarify and disseminate information on the
specific information on client assets that grantees must obtain,
record, and maintain; clarify and disseminate information on the
types of citizenship/ alien eligibility information grantees must
obtain, record, and maintain for clients who receive legal
assistance only over the telephone; clarify and disseminate LSC's
criteria for single recording of cases; clarify and disseminate
LSC's policy concerning who can provide legal assistance to
clients for the service to be counted as a case; explore options
for facilitating correct and consistent understanding of reporting
requirements, including developing and disseminating a training
video for grantee staff; 6 GAO/GGD-99-183, September 20, 1999.
Conclusions Recommendations Statement Legal Services Corporation:
More Needs to Be Done to Correct Case Service Reporting Problems
Page 9 GAO/T-GGD-99-185 LSC Case Reporting Problems develop a
standard protocol for future self- inspections to ensure that
grantees systematically and consistently report their results for
open and closed cases; direct grantees to select samples for
future self- inspections that are sufficient to draw reliable
conclusions about magnitude of case data errors; and finally,
ensure that procedures are in place to validate the results of
LSC's 1998 self- inspection, as well as of any future self-
inspections. In a written response to a draft of our report, the
President of LSC generally agreed with our findings and noted that
he plans to implement our recommendations to the fullest extent
possible. Mr. Chairman, this concludes my prepared statement. I
would be pleased to answer any questions that you or other Members
of the Committee may have. Contacts and Acknowledgement For
further information regarding this testimony please contact Laurie
E. Ekstrand or Evi Rezmovic on (202) 512- 8777. Individuals making
key contributions to this testimony included Mark Tremba and Jan
Montgomery. Page 10 GAO/T-GGD-99-185 LSC Case Reporting Problems
Page 11 GAO/T-GGD-99-185 LSC Case Reporting Problems Ordering
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